SHELF DRILLING PRESENTATION - DNB CONFERENCE | OSLO MARCH 2019
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Shelf Drilling Presentation DnB Conference | Oslo March 2019
Disclaimer
This presentation (the "Presentation") has been prepared by Shelf Drilling, Ltd. ("Shelf Drilling" or the "Company") exclusively for information purposes and may not be reproduced
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The Company uses certain financial information calculated on a basis other than in accordance with accounting principles generally accepted in the United States (“GAAP”),
including EBITDA, Adjusted EBITDA and Adjusted EBITDA margin, as supplemental financial measures in this presentation. These non-GAAP financial measures are provided as
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described in the Company’s Form 10-k equivalent for the period ended 31 December 2018 and the Company's prospectus dated 12 June 2018. Should any risks or uncertainties
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The Presentation speaks as of March 5, 2019. Neither the delivery of this Presentation nor any further discussions of the Company with any of the recipients shall, under any
circumstances, create any implication that there has been no change in the affairs of the Company since such date.
Mar 2019 | 2
Shelf Drilling is the Market Leader in Core Jack-up Regions
Global Jack-up Activity vs. Shelf Drilling's Geographical Fleet Distribution
COMPANY OVERVIEW
• International “pure-play” jack-up drilling Shelf’s fleet
company with 38 ILC jack-up rigs increased from 6 in
Shelf’s fleet increased from 4 2012 to 9 in 2017
• Fit-for-purpose operations with sole
in 2012 to 10 in 2018 in the
focus on shallow water
Arabian Gulf1 #1 position in
• Headquarters centrally located in Dubai #1 Thailand
• Top tier safety and operational
#1
performance #1 #4
• Industry leading cost structure Significant recent
increase in tendering
• Robust full cycle financial results activity
Operating in the most active and promising markets
Color represents jack-up activity level High Medium Low
Number (#) represents Shelf Drilling’s operating position
Mar 2019 | 3
Robust Operational Platform and Low Cost Structure
Average Fleet Uptime Track Record Operational excellence made
100% 98.9% 98.5% 98.6% 98.7% 98.8% 98.7% possible through
95%
Skilled workforce with extensive
90% 1 experience in the areas where we work
85%
80%
“Hand-picked” shore based
2013 2014 2015 2016 2017 2018
2 management team
Safety Track Record (TRIR1)
Shelf Drilling Global IADC Average
1.0
Average 20 years experience for
0.8
0.81
0.75
0.68
3 offshore supervisors
0.6
0.6
0.54
0.69 0.46
0.4 0.48
High national content –
0.2
0.25 0.25
4 85% across the fleet
0.22 0.23
0.0
2013 2014 2015 2016 2017 2018
Source: International Association of Drilling Contractors (IADC) as of December 2018
Note (1): Total recordable incident rate (incidents per 200,000 man-hours)
Mar 2019 | 4
Proven Track Record of Securing Contracts and Building Backlog
•Backlog Quality and Diversity1 •Fleet Status Summary
Contracted Available Total2 % Cont.
MENAM 14 3 17 82%
India 7 1 8 88%
West Africa 5 - 5 100%
SE Asia 2 - 2 100%
Other - 1 1 0%
Other
Total 28 5 33 85%
4%
NOC
41%
IOC •Total Backlog3 – $935 million (As of 31 December 2018)
55% India
7%
West
Africa
8%
MENAM
• 96% of backlog with NOCs and IOCs SEA
47%
• 28 contracted rigs with on average ~1.2 years of remaining 38%
contract term
Note (1): Customer logos include current and prior customers
Note (2): Total excludes 6 stacked rigs (5 jack-ups and 1 swamp barge).
Note (3): Total backlog as of December 31, 2018, consistent with the reporting period.
Mar 2019 | 5Resilient Full-Cycle Financial Results and Cash Flow Generation
Revenue & Adjusted EBITDA Unlevered Discretionary Free Cash Flow1
US$ million % Margin US$ million % Margin
1,400 1,310 50% 350 35%
1,169
300 30%
42%
1,120 41% 1,030 44%
40% 250 25%
40%
840 38%
684 200 20%
36% 35%
537 572 613
560 32% 150 15%
467
371
290 100 10%
280 228 218 26%
50 5%
0 20% 0 0%
2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018
Revenue Adjusted EBITDA Margin Adjusted Free Cash Flow Dividend Margin (As % of Rev)
• Strong financial performance since company inception
• Disciplined approach to financial planning and capital investment
• Track record of paying dividends in strong market – US$ 302 million in total for 2013/14
• Adjusted EBITDA margins consistently in the 35-40% range
• Resilient cash flow generation throughout the cycle
Note (1): Unlevered discretionary Free Cash Flow calculated by adjusting adjusted EBITDA for tax and capex
Mar 2019 | 6Focused Execution of Growth Strategy
Equity Raise on N-OTC Long-Term Refinancing of Listing on Oslo Børs and Announced Purchase of
and 3-Rig Purchase HY Notes Redemption of Preferred 2 Newbuild CJ46
Equity Jack-ups (+ 2 options)
Apr 2017 Jan 2018 Jun 2018 Feb 2019
Jan 2017 Sep 2017 Jun 2018 Jul 2018
Debt Reduction and Contracts Secured for 3 RCF Extension and Long- Purchase of Shelf Drilling
Initial Maturity Acquired Jack-ups Term Refinancing of Scepter
Extension Remaining Debt
Positioned the company for success ahead of market recovery
Further liquidity and
Simplification of our Wider access to capital Enhancing our fleet
credit profile
capital structure markets composition
improvement
Mar 2019 | 7Recently Announced Newbuild CJ46 Transaction
• On February 21, 2019, Shelf Drilling (SHLF) entered into agreements with
China Merchants and Great Wall Ocean Strategy & Technology Fund (CMG
or China Merchants) for the following:
1. Acquisition of two newbuild premium CJ46 jack-up rigs constructed by
China Merchants Heavy Industries (CMHI) for $87 million per rig
2. Affiliates of CMG to subscribe for $174 million of newly issued SHLF
common shares, at a subscription price of $6.50 per share
3. Bareboat charter agreements for two additional newbuild premium
CJ46 jack-up rigs with option to purchase one or both rigs
• Closing and rig delivery for the two acquired rigs targeted for Q2 2019
• Transaction brings new strategic partner and long-term shareholder
Opportunity to add four newbuild premium jack-up rigs to
SHLF fleet at historically low acquisition cost
Mar 2019 | 8High Quality Assets at Historically Low Prices
Lowest Levels for Newbuild Jack-ups Since 2004
Newbuild Order Cost by Delivery Date
US$ million
Other Rigs Noble Johnny Whitstine & Noble Joe Knight
300 Borr PPL Newbuilds Borr Keppel Newbuilds
Shelf Drilling CJ46 Newbuilds Borr Drilling – 5 Newbuilds from
Keppel at US$ 144.5 million Per Rig in
May-2018
250
200 Borr Drilling – 9 Newbuilds from PPL at
US$ 139.5 million Per Rig in Oct-2017
150
Noble – 2 CJ46 Newbuilds from
PaxOcean at US$ 93.5 million and US$
83.75 million, Sep-2018 and Feb-19
100
Shelf Drilling – 2 CJ46 Newbuilds from
50
SHLF CJ46 Newbuilds CMHI at US$ 87 million
0
1998 2001 2003 2005 2008 2010 2013 2015 2018
Source: IHS Petrodata, DNB Markets
Mar 2019 | 9Best in Class Equipment and High Build Quality
Technical Summary Advantages of Gusto MSC CJ46-X100-D
Delivery Year 2019 • Rig design meets a majority of incoming premium jack-up tender
Main Characteristics
requirements (Middle East, Southeast Asia, West Africa, Mexico,
Design Gusto MSC CJ46-X100-D
North Sea)
Build Yard China Merchants Heavy Industry (Shenzhen)
Water Depth 350 ft.
• XY cantilever – skids both longitudinally and transversely,
increased operational flexibility
Drilling Depth 30,000 ft.
Accommodation 120 persons (1 & 2 person rooms) • Larger drilling envelope with max hoisting capacity in any position
Drilling Package NOV • Increased free main deck area
Hook Load 1,500,000 lbs. (with NOV TDS-8SA topdrive)
• 15k well control equipment
Cantilever Reach 70x40ft.
• High variable deck load capacity
Equipment
BOP NOV Shaffer 15K
Draw Works NOV ADS-10T – Max line pull (14 lines), 1,501,000 lbs. • Offline stand building
3 Favelle Favco diesel-hydraulic 50t / 32.8ft.
Cranes
1 NOV knuckle boom pipe handling crane
Mud Pumps 3 x NOV 14-P-220 Triplex pumps – 2,200 hp
Power 5 x Caterpillar 3516C KW + 1 x Caterpillar C32 994 KW
CJ46 design has a proven track record with tier 1 operators
Highly Reputable OEMs and Service Providers
Mar 2019 | 10Simple Capital Structure with Strong Credit Profile and Liquidity Runway
Pro Forma Capital Structure (Illustrative) Fully Invested
Net Debt
Net/ LTM
DebtEBITDA 1
/ LTM EBITDA 1
US$ million N.m. N.m.
$2,100 15.6x
Peer median
225 RCF (currently undrawn) of 12.9x
10.2x
$1,750
6.9x
6.0x
3.7x
$1,400 8.25% Senior Unsecured
900
Notes due 2025
SHLF Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6
$1,050
Debt Maturity Profile
174 CMG Investment US$ million RCF (currently undrawn) Bonds
$700 @subscription price of $6.50/sh 1,000 900
800
$350 723 600
Existing Equity
400
@subscription price of $6.50/sh 225
200
$0
0
Capital Structure 2018 2019 2020 2021 2022 2023 2024 2025
Source: Company filings, DnB Markets
Note (1): Peers include BDRILL, DO, ESV, NE, RDC and RIG. Figures as per company filings as of December 31, 2018.
Mar 2019 | 11Strategic Evolution and Positioning of Jack-Up Fleet
13 x Premium Jack-ups 6 x Shallow Draft 18 x Standard
Demonstrated ability to invest Uniquely positioned to meet Cost efficient and well suited for
and deploy niche demand brownfield activity
• Newbuilds: 2
• Acquired Rigs: 4 • Arabian Gulf: 5 • India & Egypt: 10
• Major Upgrades: 3 • Nigeria: 1 • Other Areas: 8
NEW • Newbuild CJ46: 4
2012 2019
Total Active = 30 Total Active = 37 “Right Assets in Right Locations”
Shallow Draft Premium
4 Blend of premium & standard jack-ups
13 provides ideal match to customer
Standard
Standard 18 requirements across our regions
26 Shallow Draft
6
Mar 2019 | 12Jack-up Market Update
Cycle Turning Off of Historic Lows…Gradually
• Oil price improvement over the last three years to current # of Contracted Jack-ups
range of $60-70/bbl (Brent)
Peak (April 2014) 457 jack-ups
• Gradual recovery in jack-up supply and demand dynamics Average since 2006 368 jack-ups
Minimum since 2006 (Jan 2017) 310 jack-ups
Current (Feb 2019) 350 jack-ups
- Global demand has increased 13% since Q1 2017 but still
well below long-term averages 360 80%
Marketed Contracted Marketed Util %
- Total of 58 jack-ups retired in same time period +13% 78%
350 (40 rigs)
- Marketed utilization up fromInvestment Highlights
1
Fit for Purpose
▪ Right Assets in the Right Locations | Right-Sized Organization | High National Content
Strategy
2
▪ Critical mass and significant market share in all core geographic regions
Leading Position in
▪ Middle East, West Africa and Thailand activity poised for growth while India remains
Key Markets comparatively steady
3
World Class
▪ Best-in-class operating platform and low-cost structure
Jack-up Contractor
4
Solid Financial
▪ No debt amortization until 2025 and strong current liquidity position
Run-way
5
Tangible Growth ▪ Demonstrated acquisition capabilities in 2017/2018, with four premium jack-ups
Opportunity ▪ Adding four premium newbuild CJ46 rigs in 2019
Mar 2019 | 14You can also read
